Excise on site-consumables

Credit on inputs, used in or in relation to the manufacture of final products whether directly or indirectly is allowed. The contension of Department seems to be valid as consumables are neither used in nor in relation to manufacture of steel structures at your factory. Credit of only that part of consumables will be allowed that is used in nor in relation to manufacture of steel structures at your factory.

Where you are carrying out erectioning of steel structurals and vessels on different sites & are liable to service tax only, I suppose you are providing services as a works contractor. Service Tax is leviable on the value equivalent to the gross amount charged for the works contract less value of the transfer of property in goods involved in the execution of the works contract which is leviable to VAT/ sales tax.

Where such VAT/sales tax has been charged and Service Tax is paid on amount net of  value of the transfer of property in goods involved in the execution of the works contract, CENVAT credit on the same will not be allowed as per Circular No. 96/7/2007 –S.T., dated 23.8.2007.

Please feed some more details, the ground given by the excise people, etc. for specific replies.

Sir

Thank You very much for the reply.Can we take cenvat credit derived form the consumables used for erection work, against the payment of service tax.We Charge the customer , Service tax on gross value only.We do not adjust transfer of property in goods involved.We also adjust the VAT credit from the consumbles meant for site erection, in our monthly vat return pertaining to manufacturing activities.Is it correct.

jagannathan

Please give the classification of service provided by you, the rate of service tax charged by you from your customer. If you are providing works contract service, you may opt for Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, where you are required to pay Service tax on Gross amount @ 4% only without utilising CENVAT Credit on inputs used (though you may take credit of input services & Capital Goods as the Rules do not bar taking credit of input services & Capital Goods). If you have already opted for the scheme, you cannot utilise the credit on inputs referred in your query above. Please refer to the Rules in the link given below:

https://www.servicetax.gov.in/workcontract-rules.htm

Sir

The classification service we provide

1.Erection,Commissioning and Installation 2.consulting engineer

We charge the client 10.3% of service tax on gross value.We buy welding rods,gas etc for erection activities.How to adjust the cenvat,vat credit. Since we also carry out manufacturing activity, hither to we adjusted the credit in our manufacturing cenvat/vat return which has been objected by the department.Your guidlines on the above area will be very useful to us.

Thanking you

jagannathan

In your case, there does not seem to be any reason for disallowing CENVAT Credit. Where you are a manufacturer as well as a service provider and not claiming any exemption or Composite scheme, you are eligible to utilise CENVAT Credit. With the introduction of CENVAT Credit Rules, 2004 credit of Service Tax and Excise Duty across goods & services has been allowed. Ask the department people to refer to Rule 3 of Cenvat Credit Rules, 2004 as amended, relevant part produced below for reference:

3. CENVAT credit. - (1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of -

(i) the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act;

(ii) the duty of excise specified in the Second Schedule to the Excise Tariff Act, leviable under the Excise Act;

(iii) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act,1978 ( 40 of 1978);

(iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 ( 58 of 1957);

(v) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001);

(vi) the Education Cess on excisable goods leviable under section 91 read with section 93 of the Finance (No.2) Act, 2004 (23 of 2004);

(via) the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007);

(vii) the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii), (iii), (iv), (v) (vi) and (via);

(viia) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, Provided that a provider of taxable service shall not be eligible to take credit of such additional duty; (Clause (viia) has been inserted vide Notification No. 13/2005 - Central Excise (N.T.), dated 01/03/2005)

(viii) the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003);

(ix) the service tax leviable under section 66 of the Finance Act; and

(x) the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance (No.2) Act, 2004 (23 of 2004),

“(xa) the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and

(xi) the additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005 ) (In clause (xi), the words and figures "section 85 of Finance Act, 2005 (18 of 2005 )" has been substituted vide Notification No. 22/2005 -Central Excise (N.T.), dated 13/05/2005) (Clause (xi) has been inserted vide Notification No. 13/2005 - Central Excise (N.T.), dated 01/03/2005)

paid on-

(i) any input or capital goods received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September, 2004; and

(ii) any input service received by the manufacturer of final product or by the provider of output services on or after the 10th day of September, 2004,

(4) The CENVAT credit may be utilized for payment of –

(a) any duty of excise on any final product; or

(b) an amount equal to CENVAT credit taken on inputs if such inputs are removed as such or after being partially processed; or

(c) an amount equal to the CENVAT credit taken on capital goods if such capital goods are removed as such; or

(d) an amount under sub rule (2) of rule 16 of Central Excise Rules, 2002; or

(e) service tax on any output service:

As a Service Provider you cannot utilise Credit of Additional Duty u/s 3(5), if any, for payment of Service tax, but could be utilised for payment of Excise Duty.

Hope now it is clear that credit utilisation is possible in your case.

dear sir,

we are purchase consumble item (bricks,bettry ext) .in excise which part credit taken 23 A or 23 C

kiran